Do credit unions have a profit motive?

• A. Yes
• B. No
• C. Sometimes
• D. Not sure

Answer: (B)

Credit unions are nonprofit, member-owned financial cooperatives. They exist to meet the members’ financial needs rather than to generate profits for outside shareholders. Any extra money they earn—surplus—goes back to members in the form of lower fees, better loan rates, higher deposit returns, or is reinvested in the credit union’s reserves and services. Because the goal is to benefit members rather than maximize distributions to owners, they don’t operate with the typical profit motive of for-profit banks. They still have to stay financially healthy to serve members, but profits are used for member benefit rather than for external shareholders.